Lockheed to Close O.C. Plant, Cutting 750 Jobs
Lockheed Martin Corp. delivered another blow to Southern California’s battle-scarred defense industry by announcing Monday that it will close its Aeronutronics plant here, eliminating 750 jobs.
The plant is among eight sites nationwide, including one in Glendale, that Lockheed will shut down as a final step in consolidating operations from its April purchase of Loral Corp. Altogether, 1,600 workers will lose their jobs.
“I’m shocked,” said an engineer at the Rancho Santa Margarita plant. “Everybody knew this was going to happen, but we didn’t think it would happen so soon.”
The Aeronutronics division, which moved to Rancho Santa Margarita from Newport Beach only three years ago, is the hardest-hit of the Lockheed closings.
It comes at a time when the planned community in the foothills of the Santa Ana Mountains has been trying to bolster its image and attract big-name companies--and their high-paying jobs--to its business park.
Lockheed will lay off 525 of Aeronutronics’ 750 employees beginning in March as it transfers its tactical missile and electro-optical fire-control programs to facilities in Orlando and Ocala, Fla., and Troy, Ala. The company said 150 of the remaining employees will be offered jobs in Florida, and 75 will be asked to move elsewhere.
Lockheed said those being laid off in the consolidation may be able to transfer to newly created employment elsewhere in the company.
The closings and the layoffs follow on the heels of three billion-dollar deals Lockheed won in the last two weeks. The awards include Saturday’s $1.1-billion contract that gives it the right to compete for the Pentagon’s biggest job, a $219-billion project to build the next generation of fighter jets.
The awards were unrelated to the consolidation. The company had said after its Loral purchase that it would review its business lines and consolidate operations.
In Glendale, the company will move its Librascope division, where it manufacturers weapon and combat control systems and detection systems, to Manassas, Va. It will offer jobs there to about 70 workers and will lay off the remaining 85, said Jim Tierney, a Lockheed spokesman.
Elsewhere in California, Lockheed will change the lines of authority of several units, but few if any layoffs are expected. Aeronutronics’ Trident valve operation, for instance, will remain in Irvine but will report to Lockheed Martin Federal Systems in Manassas. Tierney said there are no plans now to move the 35 Trident employees.
Workers scheduled for layoffs will be notified in January and will receive 60 days’ notice, the company said. They will receive up to 26 weeks of severance pay, depending on their years on the job, along with outplacement services.
Wall Street sounded its approval, raising Lockheed’s stock price $1.875 a share to close Monday at $95.625 on the New York Stock Exchange.
“Lockheed is probably the most awesome defense firm in the world, bar none,” said Peter Aseritis, an industry analyst at CS First Boston brokerage in New York.
“They’ve been on a roll and continue to perform very well in terms of new contracts and in terms of exceeding analysts’ financial projections in recent quarters,” Aseritis said. “And they’ve done an excellent job in consolidating acquisitions.”
In addition to Saturday’s contract, Lockheed has in the last 10 days won a $1.1-billion contract for a revolutionary laser weapon system and a $1.8-billion contract for a space-based infrared missile warning and tracking system.
The company, which employs 190,000 worldwide and has annual sales of $30 billion, said it expects to save $300 million a year through its consolidation. That’s lower than Wall Street’s expectation of $400 million a year, Aseritis said, but is “in the ballpark.”
For Glendale, the loss of Lockheed nearly closes the chapter on a long history of military and aerospace operations in the city’s Grand Central area.
“It’s been a period of transition for that part of our town,” said City Manager David Ramsey. “Grand Central was one of the first industrial parks in Southern California. But as the economy picks up, it’s rapidly expanding with media and entertainment firms like DreamWorks and Disney.”
Those being laid off by Lockheed should be able to find jobs in the city, he said.
For Rancho Santa Margarita, however, the loss of Lockheed deals the area a severe blow.
The Aeronutronics division was a once major military contractor in Orange County. Started as a unit of Ford Aerospace, the division employed as many as 3,500 in the 1980s at its Newport Beach site. Loral Corp. bought Ford Aerospace in 1990 and announced plans to move.
Loral was persuaded to relocate three years later to the former Hughes Microelectronics building in the Rancho Santa Margarita business park.
Rancho Santa Margarita has billed itself as a place where people could live and work without getting on freeways. And the Santa Margarita Co., which built the community, has been trying to attract major corporations to its 450-acre business park.
Not only is the park half vacant, but one of its other major tenants, Unisys Corp., recently moved its computer plant operations elsewhere and eliminated 250 jobs. The park will have an additional 300,000 square feet to fill once Lockheed leaves.
The Aeronutronics division was a “big selling point” for the community, said Barry Saywitz, who heads a real estate services company in Santa Ana. “When Loral moved down there, a lot of service providers moved down to be close to them,” he said.
Because it has been on the outskirts of the county’s commercial boundaries, Rancho Santa Margarita has had a hard time attracting large companies, Saywitz said.
Santa Margarita Co. executives, however, remain undaunted.
“We’ll shortly have another tenant for the Unisys property, and I understand that a major company will be touring the Lockheed facility in next few days to look at it as a possible headquarters,” said John Kelterer, president of RSM Management Co., which manages the community.
The business park has 1.9-million square feet of office and industrial space filled, and an additional 400,000 square feet will be under construction next year.
Kelterer said he’ll have little problem marketing the Lockheed property: “The markets being what they are today, especially the market for a building of this nature, it should go quickly.”
More important, he said, Rancho Santa Margarita still promotes its motto with confidence. “The concept of living and working here has not changed appreciably,” he said.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Shutting Down
Lockheed Martin is closing its Aeronutronic division in Rancho Santa Margarita and transferring its operations to Florida and Alabama. The division, which has had three owners in the past six years, has been in Orange County since 1988. Key events:
1988: Ford Aerospace, a subsidiary of Ford Motor Co. founded in 1960, relocates its corporate headquarters from Detroit to dual offices in Newport Beach and Washington, D.C. Its Aeronutronic group in Newport Beach builds missile guidance systems and other defense products. It employs 3,549 and is the firm’s largest West Coast operation.
1990: Loral Corp. buys Ford Aerospace for $715 million and announces it may move the Aeronutronic plant, which now employs 2,500.
1993: Loral moves the Aeronutronic plant to the former Hughes Microelectronics building, a 300,000-square-foot facility in Rancho Santa Margarita; cuts in military spending reduce employment to about 1,400.
****
1996
January: Lockheed Martin Corp. buys a major portion of Loral Corp., including the Aeronutronic division, for $9.1 billion. The Rancho Santa Margarita plant employs 1,100 and builds Sidewinder and Chaparral missiles, Predator shoulder-fired antiaircraft missiles, controls for the Trident nuclear submarine missile and a radar system for the F-18 aircraft. It also develops infrared targeting equipment.
November: Lockheed Martin announces it will close eight facilities, including the Aeronutronic division in Rancho Santa Margarita, which now employs about 750. Production of Trident propulsion system valves will remain at an Irvine plant, where about 35 employees have worked since 1994. The Irvine operation will report to Lockheed Martin Federal Systems in Manassas, Va.
Sources: Lockheed Martin Corp, Times reports
Researched by JANICE L. JONES / Los Angeles Times
